This year we will begin featuring guest blogs from several members of the PKF Texas Consulting Solutions team. Craig Abbott, one of our managers in charge of the Microsoft Dynamics NAV accounts, has written a post about process development.
Despite what others may tell you, there is a magic pill you can take that will ensure your accounting software or ERP (Enterprise Resource Planning) will produce timely and accurate financial statements, provide internal reporting that is meaningful in operating your business and be that tool that helps you satisfy customers. You may have trouble swallowing this pill and you may have to break it up into smaller pieces so you can get it down, but if you do, success will follow.
It will be no surprise to anyone who has attempted to implement an ERP system that effective process development is the magic pill that will lead you to success. So what is effective process development or better yet, what is ineffective process development? The latter is usually one of two possibilities. You either change your processes entirely to meet the software functionality or you take what you are currently doing in the current system and change the new system to do the same bad things.
A key to good process development is just not what you do but when you do it. There is no rule that says you have to wait until you pick an ERP software before you start developing how you want particular transactions to work. To be honest, this information will help you pick the right system. Like my co-worker Tony Piperato says, “Develop your processes as if you are moving a blank piece of paper throughout your company, if you had no software to manage this task.” I think this is best explained by using an example, let’s take a Sales Order. The order comes into you company via phone, email or website, who does it come to or does the system need to receive this order directly. Is this a current customer? Who enters it into the system? Who determines the customer’s sales price? Who approves discounts if any are offered? What happens next? Does someone check inventory levels? Does it require a credit check? What if the inventory is not in stock? Does this order then get recorded in a list of back orders? Who will ship the order? Who Invoices the order when shipped? Who receives payment? Who follows up on nonpayment?
Once you figure out the path of this transaction you can then determine where you can take advantage of technology to become efficient. For example, based on some of the answers to the questions above do you need software that has an approval process or can give you out of stock warnings upon entering in the system? Or better yet if you are using a website, can the software tell the website that the item is out of stock? Does the system need to give credit warnings or have credit rules?
No ERP system does everything or at least everything well. By developing this process without a system first, then you can determine what is the most important for your organization. Based on this you will know what to look for when shopping a package you will have an idea of how much customization to this package is required. When you know what you need then you can compare what a particular system has. This is Gap Fit Analysis. What are the gaps between what you need and what the system offers? You then evaluate the gaps to see what you can live with or what you should modify.
The more prepared you are before talking to software consultants the better you will be able to pick a consultant that understands business process development and not just a slick salesperson. Like I have mentioned in previous blog entries, the consultant is just as important, or more important as the software.
But the important part of the process is you are starting with what you need and how your company works. Not what you are currently doing. Not what you think you want. And not what a particular system does. But you are evaluating against what is the best way for you to run your business. That is the magic pill, pretty simple.